Seiten

Donnerstag, 30. Juni 2016

This morning George spoke at the European Parliament before the Budget,
Civil Liberties, Development and Foreign Affairs Committees on the
implications of Brexit and the refugee crisis.

You will find a transcript of his remarks below.

All best,
Michael Vachon

BELOW IS AN EXPANDED VERSION OF THE DELIVERED REMARKS WHICH WAS SUBMITTED FOR THE RECORD TO THE EUROPEAN PARLIAMENT

Statement submitted to the European Parliament.
George Soros. 30 June, 2016.

When I was invited to address this joint hearing, the refugee crisis was
the greatest problem Europe faced. Since then it has played a crucial
role in what could prove to be an even greater calamity — Brexit.

The vote for Brexit was a great shock to me and, I imagine, to most
people in this room. Last Friday morning, the disintegration of the
European Union seemed practically inevitable.

But as the initial disbelief wore off, something unexpected happened, and the tragedy no longer looks like a fait accompli.

Over the past week, buyer’s remorse has begun to set in, as the
hypothetical became very real: sterling plunged, Scotland threatened to
break away, and some of the working people who supported the “leave”
campaign started to realize the bleak future that both the country and
they personally face. Even the champions of leave are retracting their
dishonest pre-referendum claims about Brexit.

In a spontaneous response, over four million people petitioned
Parliament to hold a second referendum. By the time the Parliamentary
debate on this petition takes place, it is not inconceivable that more
people will have signed the petition than voted for Brexit.

Just as Brexit was a negative surprise, the spontaneous response to it
is a positive one. People on both sides of the referendum, and most
importantly those who did not vote—particularly young people under
35—have become mobilized. This is the kind of grass roots involvement
that the European Union has never been able to generate.

The referendum has highlighted for people in Britain just what they
stand to lose by leaving the EU. If this sentiment spreads not only in
Britain, but also in the rest of Europe, what seemed like the inevitable
disintegration of the EU could instead create positive momentum for a
stronger and better Europe.

The process could start in Britain. The popular vote cannot be reversed
but a signature collecting campaign could transform the political
landscape by revealing a newfound enthusiasm for EU membership. This
approach could then be replicated in the rest of the European Union by
forming a movement that would seek to save the EU by profoundly
restructuring it. I am convinced that as the consequences of Brexit
unfold in the months ahead, more and more people will be eager to join
this movement.

What the EU should not do is penalize British voters while ignoring
their legitimate concerns about the deficiencies of the European Union.

European leaders should recognize their own mistakes and acknowledge the
democratic deficit in the current institutional arrangements. Rather
than seeing Brexit as the negotiation of a divorce, they should seize it
as an opportunity to fundamentally reform the EU. Their goal should be
the creation of a reinvented EU that the UK and other countries at risk
of exit would want to join.

Will disaffected voters in France, Germany, Sweden, Italy, Poland and
elsewhere see the EU benefitting their lives? If the answer is yes, the
EU will emerge stronger. If the answer is no, it will eventually blow
apart.

***

Unfortunately, Brexit has not only created an opening to reinvent the
European Union, it has also aggravated two looming dangers.

First, it unleashed a crisis in the financial markets comparable in
severity only to that of 2007/8. This has been unfolding in slow motion,
but Brexit has accelerated it. It is likely to reinforce the
deflationary trends that were already prevalent.

The Eurozone has been lagging in the global recovery because of
restrictive fiscal policies; now it has to contend with an impending
slowdown. The orthodoxy of the German policymakers stands in the way of
the only effective response: having a Eurozone budget that could adopt
counter-cyclical policies.

Meanwhile, the banking system of continental Europe has not recovered
from the earlier crisis; it will now be severely tested. We know what
needs to be done. Unfortunately, political and ideological disagreements
within the Eurozone have stood in the way of using the European
Stability Mechanism (ESM) as a backstop for banks as well as sovereigns.

Second, the EU faces growing military threats. Our external enemies have
been emboldened. They pose new, as-yet unfathomable dangers in various
parts of the wider region that are also liable to aggravate the refugee
crisis.

It is against this background that I propose to discuss the refugee
crisis, with special emphasis on the financial needs it presents.

***

The European response to the refugee crisis was riddled with flaws even before the present turn of events.

Chancellor Merkel showed great moral leadership when she opened
Germany’s doors wide to refugees. Unfortunately, her initiative was not
well thought through; it ignored the pull factor. When the sudden influx
of migrants overwhelmed the capacity of the authorities, public opinion
turned against her. That is when she struck her ill-fated deal with
Erdogan.

I have identified the flaws of that deal in detail.

First, it was not truly European; it was imposed on Europe by Chancellor Merkel.

Second, it was severely underfunded.

Third, it was not voluntary: it imposed quotas that many member states
opposed and required refugees to take up residence in countries where
they were not welcome, while forcing others who reached Europe by
irregular means to be returned to Turkey.

Finally, it transformed Greece into a de facto holding pen with inadequate facilities.

Since then, the situation has only deteriorated. Member states have
become increasingly unwilling to cooperate with one another, and are
pursuing discordant policies. While migrant flows to Greece have eased
considerably, they have surged in the Central Mediterranean.

In these circumstances, a comprehensive and coherent European asylum
policy is not possible. The trust needed for cooperation is lacking. It
will have to be rebuilt through a long and laborious process.

***

This process should start by addressing the dire lack of financial resources.

Without sufficient funding, the EU cannot perform the functions it was
designed for nor meet the expectations of the European people. And
because it fails to achieve the objectives it has set for itself, the
Union loses its legitimacy and the support of its citizens.

The refugee crisis illustrates the problem. At least €30 billion a year
will be needed both inside the Union—to build effective border and
asylum agencies, to ensure dignified reception conditions, fair asylum
procedures and opportunities for integration—as well as outside its
borders—to support refugee-hosting countries and to spur job creation
throughout Africa and the Middle East. This does not include the costs
borne by member states, which are on track to spend upwards of €200
billion between 2015 and 2020 on refugee reception and integration.

The refugee crisis should not pervert our relationships with neighboring
countries as it has with Turkey. I am concerned that in its latest
communication on migration and external relations, the Commission calls
for making development funds contingent on the implementation of
migration controls by African partners. This violates decades of
practice in development funding and risks a race to the bottom in the
treatment of migrants and refugees. The grand bargain with African and
other countries cannot simply be that, if you stop migrants from coming
to Europe, you will receive financial aid. A meaningful grand bargain
would focus on real development in Africa that over a generation would
actually address the root causes of the crisis. This means free trade,
massive investment, and a commitment to rooting out corruption. Leaders
in Europe have called for a Marshall Plan for Africa. This is an
admirable ambition. But when it comes to the details, Europe is a far
away from such a vision. The United States invested 1.4% of its GDP to
help rebuild Europe—every year for four years. An investment on the
scale of the original Marshall Plan would require around €271 billion a
year for the next four years.

The political and economic costs of inaction would be even greater.
Brexit is the starkest example of these consequences. But we also have
compromised the Schengen system, driving up the economic costs.

Given that its very survival is at stake, the EU should be putting all
of its available resources to use. And yet the triple-A credit of the
Union has barely been deployed. This is the height of irresponsibility.

The current approach is based on reallocating minimal resources from the
EU budget and then asking Member States to contribute to various
dedicated vehicles, such as the Turkish Facility and the Trust Fund for
Syria. This can only be a temporary solution, as it is neither
sustainable and nor large enough to finance efforts that must grow in
size and scope (such as a European border force). These trust funds are
powerful instruments in the short term to redeploy resources and allow
member states to commit more resources to a particular endeavor, but
they also illustrate the fundamental deficiency of the EU budget, i.e.
that it remains dependent on the good will of the member states at each
step.

In order to raise the necessary funds in the short term, the EU will
need to engage in what I call “surge funding.” This entails raising debt
by leveraging the EU’s relatively small budget, rather than scraping
together insufficient funds year after year. During the financial
crisis, the EU has repeatedly put its borrowing capacity on display,
establishing financial instruments capable of quickly borrowing tens of
billions of euros on attractive terms. Once Europe’s leaders make a
political decision to act, they can move quickly.

There is a strong case to be made for using the EU’s balance sheet.
Tapping into the triple-A credit of the EU has the additional advantage
of providing a much-needed economic stimulus for Europe. With global
interest rates at historic lows, now is a particularly favorable moment
to take on such debt.

In the short term, reforms of the EU’s existing instruments would allow a
far more effective mobilization of resources than the creation of new
ones. Two sources of money in particular—the European Financial
Stability Mechanism (EFSM) and the Balance of Payments Assistance
Facility (BoP)—should be put to the task. These sources complement each
other: the EFSM was designed for loans to euro-area members, whereas the
BoP is for EU members that do not belong to the Eurozone. Both kinds of
loans will be necessary for a comprehensive approach to the crisis.
Both also have similar institutional structures, and both are backed
entirely by the EU budget—and therefore do not require national
guarantees or national parliamentary approval.

The Macro Financial Assistance facility (MFA) is yet another source of
borrowing specifically designed for actions outside of the EU. It has
proven an important instrument in countries like Ukraine but it needs a
new framework agreement. (This is urgent because a framework agreement
takes a long time to enact and the current Ukrainian government deserves
more support than the EU is currently able to offer.)

The combined gross borrowing capacity of the EFSM and the Balance of
Payments assistance facility is €110 billion. The borrowing power of the
latter is almost completely unused. The EFSM has made some €46.8
billion worth of loans to Portugal and Ireland and its spare capacity
grows each year as those loans are repaid.

All the instruments mentioned add up to a substantial unused borrowing capacity.

Spending a large amount at the outset would make it much easier to
manage immigration and will allow the EU to respond more effectively to
some of the most dangerous consequences of the crisis.

These include the kind of anti-immigrant sentiment that fueled Brexit
and is poisoning other states; support for authoritarian political
parties; and despondency among those seeking refuge in Europe who now
find themselves marginalized in Middle East host countries or stuck in
transit in Greece.

Making large initial investments will help tip the economic, political,
and social dynamics away from xenophobia towards constructive outcomes
that benefit refugees and host countries alike.

***

Of course, raising more debt with the current budget will eventually
pose deeper questions in light of the limited revenues of the EU budget.
The situation has gotten worse over the years as the real own resources
of the EU budget (such as customs duties) have shrunk. It is now time
to drastically reshape how the EU’s own resources are raised.

The reduction of the EU’s resources in 2014 to 1.23% of GDP was a tragic
mistake and we are paying the price for it now. The EU cannot survive
with a budget of this size. I was greatly encouraged last year when
Minister Schauble raised the idea of a pan-European gasoline tax. The
European Parliament should seriously consider this idea.

The proper route for such a tax increase would be for the European
Commission to propose new legislation to be adopted with the unanimous
support of all members. This would likely fail, given unanimity rules in
budgetary matters. But if a “coalition of the willing” of at least nine
countries could be assembled, the Commission could act without
unanimity. The proposed European financial transaction tax (FTT) sets an
important precedent even if it is still a work in progress. A stable
source of revenues would greatly increase the amount that the EU can
borrow and would allow it to finance new initiatives.

In any case, the EU and its member states must find new sources of tax
revenue. Another approach would be to levy special EU-wide taxes. The
new tax revenue could come from a variety of sources, including the
existing EU-wide VAT; or a new tax on travel into the EU and on visa
applications, which would shift some of the burden onto non-EU citizens
wishing to travel to the EU.

I accept the difficulty of raising additional tax revenue but there are
encouraging precedents for instance, the Single Resolution Board that
raises a levy on the banks could in principle borrow money against that
levy. There are many instances where, despite institutional obstacles,
the creativity of lawmakers and the Commission has allowed new
instruments to emerge.

The euro area also needs a budget of its own, as a subset of the
European Budget. The European Stability Mechanism created during the
crisis can be seen as the embryo of such a budget but it is an
intergovernmental construct subject to the vetoes of national
parliaments. Member states should be encouraged to bring the ESM under
the control of the European Commission and the European Parliament. In
practical terms, this would amount to a transfer by the member states of
the €80bn of paid-in capital they have invested in the ESM. This would
also allow extending its use to other purposes like the creation of a
European unemployment scheme.

Finally, I come to the legacy expenditures that have crippled the EU
budget. Two items stand out: cohesion policy, with 32% of expenditures,
and agriculture with 38%. These will need to be sharply reduced in the
next budget cycle starting in 2021.

With these changes related to its finances, the European Union would be
much stronger. It would be in a position to respond to a destructive
economic slowdown, it would have the means to address the corrosive
consequences of the refugee crisis both in Europe and abroad and finally
it would recognize the institutional existence of the euro area and its
specific fiscal and financial needs.

To sum up, the refugee crisis poses an existential threat to Europe. As I
said before, it is the height of irresponsibility to allow the EU to
disintegrate without utilizing all its resources. Throughout history,
governments have issued bonds in response to national emergencies. When
should the triple-A credit of the EU be put to use if not at a moment
when the European Union is in mortal danger?

KABOOM!

Über mich

"Stable order is always provisional and
threatened by complexity. We should finally start thinking that we all
live on the edge of chaos. For this reason, if they were truly digested,
the theories of complexity and chaos could change our way of seeing
what happens in our cultures.They lead us to mistrust all the
totalising and totalitarian conceptions which have the pretension of
telling us with certainty what the world will be like and which
therefore supply us with the instruments to dominate as we may please –
or to help us submit to those who, in their opinion, will dominate us.
Living on the edge of chaos is also an aesthetic choice: the acceptance of living joyously with the unpredictable,
the new and the unknown. Rather than being simply the humiliation of
our arrogance, it is the renunciation of the imaginary "regular income"
of determinism and the transformation of our uncertainties into a
genuine wealth to help us to survive."

Keeling Kurve

Dynastic Cycle

Institute of Computergraphics TU Wien

Hierachy of Complexity

Seitenaufrufe im vergangenen Monat

Roessler Attraktor

"Real economics is the study of how people transform nature to meet their needs," said Charles Hall, professor of systems ecology at SUNY-ESF and organizer of both gatherings in Syracuse. "Neoclassical economics is inconsistent with the laws of thermodynamics."